Rockwell Automation, Inc. (ROK)

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Rockwell Automation (ROK)

Q4 2011 Earnings Call

November 08, 2011 8:30 am ET

Executives

Keith D. Nosbusch - Chairman, Chief Executive Officer and President

Rondi Rohr-Dralle - Vice President of Investor Relations & Corporate Development

Theodore D. Crandall - Chief Financial officer and Senior Vice President

Analysts

C. Stephen Tusa - JP Morgan Chase & Co, Research Division

Julian Mitchell - Crédit Suisse AG, Research Division

John G. Inch - BofA Merrill Lynch, Research Division

Shannon O'Callaghan - Nomura Securities Co. Ltd., Research Division

Richard M. Kwas - Wells Fargo Securities, LLC, Research Division

Jeffrey T. Sprague - Vertical Research Partners Inc.

Terry Darling - Goldman Sachs Group Inc., Research Division

D. Mark Douglass - Longbow Research LLC

Presentation

Operator

Thank you for holding, and welcome to Rockwell Automation's Quarterly Conference Call. I need to remind everyone that today's conference call is being recorded. [Operator Instructions] At this time, I would like to turn the call over to Rondi Rohr-Dralle, Vice President of Investor Relations. Ms. Rohr-Dralle, please proceed.

Rondi Rohr-Dralle

Thanks, Stacey. Good morning, everyone. Thank you for joining us for Rockwell Automation's Fourth Quarter Fiscal 2011 Earnings Release Conference Call. Our results were released this morning and the press release and charts have been posted to our website at www.rockwellautomation.com. Please note that both the press release and charts include reconciliations to non-GAAP measures. Additionally, a webcast of this call is accessible at that website and will be available for replay for the next 30 days.

As always, with me today are Keith Nosbusch, our Chairman and CEO; and Ted Crandall, our Chief Financial Officer. Our agenda includes opening remarks by Keith that will include highlights on the company's performance in the fourth quarter and the full year, plus his reflections on fiscal '11 and the year ahead. Then Ted will provide more details around the fourth quarter and full year results and our guidance for fiscal 2012. We'll take questions at the end of Ted's remarks.

We expect the call today to take about an hour. As is always the case on these calls, I need to remind you that our comments will include statements related to the expected future results of our company and are therefore, forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from our forecasted projections due to a wide range of risks and uncertainties that are described in our earnings release and detailed in all of our SEC filings. So with that, I'll hand the call over to Keith.

Keith D. Nosbusch

Thanks, Rondi. Good morning, everyone, and thank you for joining us on the call today. I appreciate your time and interest in Rockwell Automation. The first portion of my remarks will cover the highlights for the quarter and the full year, so please turn to Page 4 in the slide deck.

The fourth quarter capped to be a year of outstanding sales and earnings performance. All regions performed extremely well. In the emerging markets, year-over-year growth rates moderated as we anticipated and discussed on the last earnings call, but sequential growth was solid at 14%. Great execution in our solutions businesses resulted in a very strong quarter for the Control Products & Solutions segment. On total company sales growth of 22%, earnings per share grew more than 50% to $1.39. So in every dimension, another excellent quarter.

We have a lot to be proud of in 2011. In the midst of pockets of economic turmoil, social unrest and natural disasters, we hit on all cylinders. For the full year, we had record sales of $6 billion and now have exceeded peak sales from the previous cycle. Logix sales grew 29%, reflecting the success of our plant-wide optimization strategy and continued penetration both in process applications and with OEM customers. Emerging markets grew over 30%, reaching 22% of total sales despite strong sales growth in the U.S. and Europe.

Sales growth for the year of 24% is noteworthy. Our earnings per share growth of 57% more than double our sales growth rate is even more impressive. Continued strong cash flow and a healthy balance sheet enabled us to fund organic growth, make 2 acquisitions, significantly increased the dividend for the second consecutive year, repurchase 4 million shares and made $450 million in discretionary U.S. pension contributions in September and October.

The performance this past year is evidence that not only is the strategy right, but our team is executing extremely well. I want to thank our employees for their dedication in making this year possible and our customers and partners for their continued support.

Let me shift gears and talk about the future. Although it is hard to know exactly how this business cycle will play out in the near term, the long-term outlook is bright for the automation market and for Rockwell Automation in particular. There is an ongoing need for automation investment in developed markets to drive productivity and manufacturing flexibility, to address safety and sustainability needs of customers and to replace an aging installed base.

In emerging markets, the case for automation is even more compelling. There still is a need for infrastructure investment such as metro systems, port facilities and Water Wastewater treatment plants. Oil and gas and mining investment remains healthy and is critical to the economic development of emerging markets. Rising standards of living, including a rapidly growing middle class will increase a need for consumer products manufacturing, and wage inflation is a natural tailwind for automation investment.

Read the rest of this transcript for free on seekingalpha.com